Why do business owners need an estate plan that encompasses succession?

Date: Feb 05, 2016

A small-business owner knows that their time in charge must at some time come to an end. However, should a succession plan should form a part of their estate planning process?

According to the Australian Bureau of Statistics, there were over 2.1 million businesses operating in Australia as of June 2014 and 97 per cent of these were considered small.

Yet, survival is a hard task for many Australian businesses: Of the 294,210 businesses that started up in 2010-11, only 50 per cent were still operating in June 2014.

To make sure your company survives into the future, it is important that you have a succession plan in place.

Estate and succession planning work together

As a small-business owner, you will know that your private affairs can overlap with your business activities. This is why it is important to have a plan in place that will encompass the transfer of your ownership stake when you are ready to exit the business.

Additionally, if your business is family owned and run, it is essential that you develop a succession plan that can facilitate the swift and easy transition of ownership from one generation to the next or into the hands of a third party.

A proper succession plan can help avoid a number of issues, such as:

Family conflict and estate disputes

Business decline and insolvency

An unfulfilled retirement

To accomplish this, a small-business owner will need to set down a holistic and far-reaching succession plan as part of their estate planning process.

A complete estate planning solution

A wills and estate lawyer is an essential source of knowledge and is indispensable in relation to planning for succession.

An experienced lawyer will be able to develop a legal pathway for the transference of ownership from one person to another. One way to accomplish this is by crafting wills, investment plans and succession documents that all work together. By creating a suite of documents that can govern succession, an owner can be assured that their business will not be an obstacle to retirement.

Creating a succession plan as part of your estate planning activities is one way to ensure your business and your family are safeguarded for the future. Rather than leaving your business up to fate, developing a proper succession plan during an estate planning process can be the platform it needs to grow.